(Bloomberg) -- Germany faces the prospect of hardly any growth this year in the wake of the economy’s surprise second-quarter contraction, according to economists.
Gross domestic product will rise 0.1% in 2024, down from a prior prediction of 0.2%, the median forecast in a monthly Bloomberg survey shows. Analysts also trimmed their outlook for 2025 by the same amount, to 1.1%.
- Read more: SURVEY REPORT: Germany Economic Forecasts in Aug. 2024
The downbeat assessment follows data that showed the country’s industrial woes continuing to hold back growth, causing Europe’s biggest economy to unexpectedly shrink in the three months through June.
While reports last week showed factory orders and industry production did increase at the end of that period, that pickup isn’t yet enough to make up the ground lost so far.
Exports still failed to rise in June, underscoring the challenges faced by the manufacturing base that was formerly a key driver of German growth. Half of the shortfall in industrial activity there could be structural, according to research of Bloomberg Economics.
Analysts still predict a delayed recovery to start taking hold now, with continuous expansion through to 2026. That might be a comfort to Chancellor Olaf Scholz, who has seen growth in fewer than half of the calendar quarters since he took office, and faces an election next year.
The 0.1% forecast of economists is in line with the European Commission’s prediction for 2024. The International Monetary Fund, Bundesbank, and OECD see slightly faster growth.
In its most recent monthly report, the German central bank still warned that “the spell of weak demand has not yet been fully overcome,” and that “industrial activity is likely to improve only slowly.”
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